Adani Enterprises, Adani Ports top gainers on Nifty. What is driving the rally?

Adani Total Gas, Adani Green Energy, Adani Transmission, and Adani Green Energy gained 5% each freezed at 5% upper limit, and Adani Wilmar was up by 10%.  The market capitalisation of Adani Group increased by almost 50% from its February 27 low of ₹6.8 lakh crore. Presently, market capitalisation of the Adani Group is at ₹10 lakh crore, down from ₹19.2 lakh crore on January 23.

On May 6, the expert panel that the SC established to examine regulatory issues in the wake of the Hindenburg report in the Adani case turned in its final report. On March 2, the panel was granted two months to submit a progress report in the case.

The Committee’s task is to determine if a regulatory failure occurred, not to determine whether the price increase in Adani stock was warranted.

SEBI stated in a briefing requested by the committee that despite putting Adani group scrips under various surveillance measures, it had not discovered any proof of “wash trades” (where connected parties trade continuously in a stock with one another without intending to actually transfer ownership of the stock).

The regulator claimed that the stock exchanges had tracked the price movement of Adani equities on four occasions, according to the committee. Two of them occurred before the release of the Hindenburg Report, while two occurred after the report’s publication (which occurred after January 25).

The market has updated its valuation and pricing of the Adani stocks, according to the committee.

“While they may not have returned to the pre-January 24 levels, they are stable at the newly re-priced level. The volatility in the Adani stocks was indeed high, which is attributable to the publication of the Hindenburg report and its consequences,” the report said.

According to Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities Adani group stocks are in green zone after SC-appointed panel of experts examining India’s regulatory mechanism in an investigation linked to the Hindenburg allegations has given a clean chit to the Adani Group. If we go with fundamentals post Hindenburg saga there has been no material impact on company businesses and such clean chit reports would gradually increase confidence in the group stocks.

“We continue to remain neutral on this development despite stock prices moving high ahead of the news impact. We believe going forward we will get more updates for other regulatory bodies on this group which could keep this counter in volatile action,” said Tapse.

Further, media reports claim that the Adani Group is looking into the potential of selling off real estate holdings that have been considered to be non-core to its business. The group has already discovered a few of these resources and is currently compiling a list of further ones.

(more to come)